X

College & Career Training in Alaska

01Sep

One Big Reason to Make Loan Payments In School: Why pay when you don’t have to? To save money!

If loans are part of your plan for college or career training, the first way to save is to do your research and pick the best loan. But there’s another secret to big savings: payments in school.

Some loans require payments while you’re in school – others offer in-school deferments, meaning you can wait until after you stop attending to start repayment. So why make payments if you don’t have to? To save money, of course!

If you have subsidized federal loans, in-school interest is paid by the federal government, but making small payments every month – perhaps $25 or $50 – reduces your balance, meaning lower required payments after you leave school, and a lower overall cost.

If you have unsubsidized loans, optional in-school payments pay off even more: Interest accrues while you’re in school – meaning that by the time you need to start repayment, the loan balance is already higher than it was when you took out the loan. Payments in school, even if only for the interest accruing, keep that balance lower.

Other benefits to in-school payments? You’re developing good repayment habits, which can make it easier to transition to repayment, and help your credit profile. And, some lenders (including the State of Alaska) offer additional perks, such as an interest rate reduction if you sign up for automatic payments while in-school.

Want to learn about other ways to save after you’ve borrowed? Check out our blog post on refinance.

About the Author

Tyler Eggen

Tyler Eggen

Tyler is Alaskan born and educated, with over a decade of experience in higher education & student affairs.  When he is not serving the next generation of postsecondary education students, he enjoys spending time outdoors while hunting and fishing.

Related

Scholarship Applications - How Things You've Learned Connect to Future Opportunities!

Scholarship Applications - How Things You've Learned Connect to Future Opportunities!

When I was a high school senior, I had no idea what to write on scholarship applications. I grew up ...

Read More >
Resumes and Prior Learning: Creating the Best Possible Picture of YOU

Resumes and Prior Learning: Creating the Best Possible Picture of YOU

Résumés are the perfect place to keep track of this information. As a living, breathing document, y...

Read More >
Winter break here we come! Things to do in your free time on winter break.

Winter break here we come! Things to do in your free time on winter break.

For many students, the winter break can last several weeks and bring many opportunities you can take...

Read More >
EEEK! Prior Prior Year?! Independent Student, What?!

EEEK! Prior Prior Year?! Independent Student, What?!

Happy Halloween! Have you filed your FAFSA yet? Not to scare you, but most forms of financial aid ar...

Read More >
Federal Work-Study

Federal Work-Study

If you’re college bound, or already in college, you know that you can always use a little extra mon...

Read More >
College & Career Fairs - How to Prepare

College & Career Fairs - How to Prepare

The aroma of pumpkin spice is in the air. It is after all, the month of October. For juniors and sen...

Read More >